PNC Bank, N.A. v. OM Properties, LLC et al

Filing 4

Order re: 2 MOTION to Appoint Receiver filed by PNC Bank, N.A. Defendants are ordered by 7/10/2013 to file a statement indicating whether they consent to the appointment of a receiver. The 3 MOTION to Expedite Receivership Hearing is denied. Signed by Chief Judge William H. Steele on 7/3/2013. Copy sent to defendant's counsel via regular U.S. Mail and by email on 7/3/13. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
PNC BANK, NATIONAL
ASSOCIATION,

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Plaintiff,
v.
OM PROPERTIES, LLC, et al.,
Defendants.

MISC. ACTION 13-0009-WS-M

ORDER
This matter comes before the Court on plaintiff’s Motion to Set Expedited Hearing on
Motion for Appointment of Receiver (doc. 3).
On June 28, 2013, plaintiff, PNC Bank, National Association, filed a “Motion for
Appointment of Post-Judgment Receiver” (doc. 2) in this miscellaneous action. The Motion
reflects that on April 23, 2013, the U.S. District Court for the Northern District of Florida entered
a judgment in PNC’s favor and against defendant P.K. Garg Family, LLC, in the amount of
$1,862,747.12; against defendant OM Properties, LLC, in the amount of $582,647.96; and
against defendant Dr. Purushottam Kumar Garg in the amount of $2,445,395.08. This judgment
relates to certain loans that PNC’s predecessor made to OM Properties and P.K. Garg Family, as
to which those defendants entered into promissory notes and Dr. Garg executed guaranties. One
such loan was secured by a first priority lien in 66 acres of real property located in Robertsdale,
Alabama. Another loan was secured by a first priority lien in real property located in Loxley,
Alabama. The third loan was secured by a first priority lien in a specific condominium unit at
the Holiday Isle complex located in Dauphin Island, Alabama.
According to the Motion for Appointment of Receiver, PNC unsuccessfully worked with
defendants following entry of judgment to endeavor to resolve the indebtedness. In the course of
those discussions and negotiations, PNC alleges, defendants made certain misrepresentations
about the occupancy and income-producing status of the properties, and also made inconsistent
or inaccurate statements concerning their efforts to sell certain of those properties. For these and

other reasons, PNC articulates what it calls “substantial concerns about Defendants’ financial
stability and their ability to manage, lease and [sell] the properties.” (Doc. 2, ¶ 19.) On that
basis, PNC calls upon this Court to exercise its equitable power to appoint a receiver for the
properties in Robertsdale, Loxley and Dauphin Island. See, e.g., Gilchrist v. General Elec.
Capital Corp., 262 F.3d 295, 302 (4th Cir. 2001) (“We begin our analysis by recognizing that the
district court has within its equity power the authority to appoint receivers and to administer
receiverships.”); Santibanez v. Wier McMahon & Co., 105 F.3d 234, 241 (5th Cir. 1997) (“[T]he
District Court had the power to appoint a receiver to take possession of the judgment debtor’s
property for preservation under Federal Rule of Civil Procedure 66.”); Rule 66, Fed.R.Civ.P.
Case law makes clear that “[r]eceivership is an extraordinary remedy that should be employed
with the utmost caution and is justified only where there is a clear necessity to protect a party’s
interest in property, legal and less drastic equitable remedies are inadequate, and the benefits of
receivership outweigh the burdens on the affected parties.” Netsphere, Inc. v. Baron, 703 F.3d
296, 305 (5th Cir. 2012) (citations and internal quotation marks omitted).1
Contemporaneously with the Motion for Appointment of Receiver, plaintiff filed a
“Motion to Set Expedited Hearing” on its request for appointment of receiver. According to
PNC, expedited treatment of that request is necessary because the Robertsdale property is subject
to a purchase offer that will expire on August 15, 2013.2 On that basis, PNC requests an
evidentiary hearing on its request for appointment of receiver during the week of July 8, 2013.
1

There is authority for the proposition that, even though the underlying judgment
was entered by the U.S. District Court for the Northern District of Florida, receivership
proceedings are properly litigated in this district because the subject property is found here. See
12 Charles Alan Wright et al., Federal Practice & Procedure Civ. § 2985 (“Because the
appointment of a receiver is in the nature of a proceeding in rem, there must be a strong nexus
between the court and the receivership. … [A]ppointment is within the proper jurisdiction of a
court that is sitting in the district where a substantial portion of the business is conducted or the
property kept … that is to be subjected to the receivership.”) (footnotes omitted).
2

No information is provided by PNC as to whether this purchase offer is attractive
or even favorable to the putative sellers, whether there is any reason to believe that other
prospective buyers may or may not be interested in purchasing the Robertsdale property for
comparable price, or whether the offering purchaser would be willing under any circumstances to
make a similar purchase offer after the artificial deadline of August 15. Thus, the Court has no
information suggesting that this August 15 deadline is “firm” or that any substantial risk of harm
will accrue to PNC or anyone else if a receiver is not appointed prior to that date. Just because
(Continued)
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The Court declines to set the Motion for Appointment of Receiver for an evidentiary
hearing at this time. Simply put, the undersigned is aware of no reason why a hearing will be
warranted on the underlying motion. Applicable authorities do not require a hearing, particularly
where, as here, the factual basis for the plaintiff’s request for appointment of a receiver is welldeveloped in the record. See Citronelle-Mobile Gathering, Inc. v. Watkins, 934 F.2d 1180, 1189
(11th Cir. 1991) (“there is no general requirement of a hearing in Rule 66, and the court may
approve of the appointment of a receiver without a hearing where the record discloses sufficient
facts to warrant it”). Moreover, PNC represents to this Court that it believes the Motion for
Appointment of Receiver will not be contested, inasmuch as “Defendants have indicated to
Plaintiff that they would consent to the appointment of a receiver.” (Doc. 3, ¶ 6.) For these
reasons, the Motion to Set Expedited Hearing (doc. 3) is denied.
That said, the Court is cognizant of plaintiff’s desire to resolve the appointment issue
prior to the August 15 deadline, and firmly believes that such a time frame is feasible. To that
end, defendants are ordered to file a statement on or before July 10, 2013, indicating whether
they consent to the appointment of a receiver under the specific terms proposed by PNC. Please
note that defendants’ statement should not simply address the general concept of appointment of
a receiver; rather, it must specify whether defendants consent to the form of relief proposed by
plaintiff, and particularly the 37-paragraph, 11-page single-spaced order that PNC has appended
to its Motion. If defendants disagree with any of those proposed terms, they are ordered to
negotiate with PNC in good faith to ascertain whether those differences may be worked out, and
to indicate in their July 10 statement what the status of those negotiations (and any outstanding
areas of disagreement) might be. Depending on the contents of defendants’ July 10 submission,
the Court will enter an appropriate follow-up order.
DONE and ORDERED this 3rd day of July, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

there is an outstanding offer to purchase one of the subject parcels of real property does not
necessarily imply that it is a good offer, much less that the judgment creditor stands to suffer
substantial harm if such offer is permitted to lapse.

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